STATE EMPLOYEES RETIREMENT COMMISSION MEDICAL EXAMINING BOARD For DISABILITY RETIREMENT		55 ELM STREET HARTFORD, CONNECTICUT 06106-1775 Telephone (860) 702-3480 Facsimile (860) 702-3489
	STATE OF CONNECTICUT
	RETIREMENT SERVICES DIVISION OFFICE OF THE STATE COMPTROLLER

RETIREMENT SERVICES DIVISION MEMORANDUM NO. 2011-01

February 22, 2011

TO THE HEADS OF ALL STATE AGENCIES

I. INTRODUCTION

As a qualified retirement plan, SERS is required to impose certain limitations required by Internal Revenue Code ("IRC") Section 415. IRC Section 415 places certain limitations on retirement benefits that may be paid to retirees. This notice is being provided to clarify the IRC Section 415 limitations.

II. INTERNAL REVENUE CODE, SECTION 415

Internal Revenue Code, Section 415(b) limits an individual's retirement benefit amount. The retirement benefit is limited to the lower of the SERS benefit calculation or the IRC, Section 415(b) limit. Under Section 415 the portion of the retirement benefit attributable to employer contributions as well as picked up employee contributions may not exceed the lesser of:

1. The limit under IRC, Section 415(b) also known as the Dollar Limit is an indexed dollar amount that is adjusted based upon the retiree's (i) calendar year of retirement, (ii) age at retirement and (iii) employment classification at retirement, or

 

2. 100% of the retiree's "compensation during his/her three highest paid consecutive calendar years of active employment".

As referenced previously, IRC, Section 415 sets forth indexed dollar amounts that are adjusted based upon the three aforementioned factors of calendar year of retirement, age at retirement and classification at time of retirement.

The table that follows lists those indexed dollar amounts for 2010 for select age groups and employment classifications:

In addition, there is a federal limitation under IRC, Section 401(a)(17) on compensation upon which employee retirement contributions can be taken and retirement benefits calculated. For 2010 employee contributions and benefits could not be based on earnable salary which exceeded $245,000. This amount remains unchanged for 2011. These limits are indexed annually.

The Division will be sending out a separate communication concerning contributions on salaries above the compensation limits.

III. CONCLUSION

It is important for SERS members to be cognizant of the circumstances under which these limits may affect their pensions. Individuals who feel they may meet or exceed the limits as discussed herein may contact the Retirement Counseling Unit at (860) 702-3490 for a determination of how IRC, Section 415(b) may affect the calculation of their retirement benefit.

Very Truly Yours,

STATE EMPLOYEES RETIREMENT COMMISSION
KEVIN LEMBO, SECRETARY EX OFFICIO

BY:

Jeanne A. Kopek, Acting Director
Retirement Services Division

JAK/CN

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